How can affordability issues in property be addressed effectively?

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Addressing Property Affordability Challenges

Affordability issues in the Malaysian property market can be addressed through a combination of government initiatives aimed at stimulating demand, reducing transaction costs, and supporting buyers, alongside measures to manage supply and market overhang. Economic uncertainties, rising inflation, and the overnight policy rate (OPR) have led many potential buyers to postpone their purchasing plans. A significant portion of respondents in PropertyGuru Malaysia's Consumer Sentiment Study for the first half of 2022 indicated an inability to purchase a home without government assistance, highlighting the need for targeted interventions.
Extending Home Ownership Campaigns and Incentives

The Home Ownership Campaign (HOC) has proven effective in encouraging property transactions, with a substantial percentage of respondents indicating they would proceed with a purchase if such a campaign were active. PropertyGuru Malaysia suggests extending the HOC to encompass the secondary property market. This extension could create broader demand by offering a wider range of options and price points to potential buyers, thereby further stimulating homeownership.
Reducing Transaction Costs Through Stamp Duty Adjustments

Reducing or eliminating stamp duty for residential properties priced at RM500,000 and below for all Malaysians is proposed as a measure to boost market activity. While the government has introduced initiatives like the Malaysia Home Ownership Initiative (i-MILIKI) and stamp duty exemptions for first-time buyers, further reductions on stamp duty could provide immediate relief and make more affordable properties accessible to a larger segment of the population. This aligns with the observed increase in rental demand, suggesting a temporary shift to renting due to current affordability challenges.
Implementing Targeted Subsidy Schemes and Developer Support

Introducing schemes similar to the MyHome Scheme, which provides government subsidies to help first-time buyers secure low-cost housing, is recommended. PropertyGuru Malaysia also proposes providing an upfront subsidy directly to developers for each house sold. This subsidy would cover buyers' deposit fees and qualifying payment amounts, ultimately reducing the monthly loan repayments for purchasers and making homeownership more attainable.
Managing Property Overhang and Encouraging Market Balance

The issue of property overhang remains a concern, with a notable increase in unsold residential units recorded by both MIDF and the National Property Information Centre. As of the first quarter of 2022, residential overhang units stood at 35,592, and in the first half of 2022, the National Property Information Centre reported 34,092 units valued at RM21.73 billion. Addressing this overhang through measures that stimulate demand, such as the proposed HOC extension and stamp duty adjustments, can help rebalance the market and prevent further price stagnation or decline.

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How can affordability issues in property be addressed effectively?

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